Description

Microchip Hits Pause on CHIPS Act Funds & Faces Big Challenges: A Red Flag For Investors?

Microchip Technology reported its second-quarter fiscal year 2025 financial results amidst a challenging macroeconomic environment. The company faced a sequential net sales decline of 6.2% to $1.164 billion. Excluding a $13.3 million benefit from the settlement of a legal matter with a licensee, net sales declined by7.3%. This downturn reflects ongoing inventory corrections and weak demand across most regions and end markets, particularly in Europe, where revenue decreased by nearly 20% sequentially. Despite the revenue decline, Microchip’s non-GAAP gross margin was 59.5%, slightly above the midpoint of guidance, though this figure included capacity underutilization charges of $25.9 million due to managed production levels. Excluding the legal settlement benefit, the non-GAAP gross margin stood at 59.1%. Non-GAAP operating expenses were 30.3% of net sales, leading to a non-GAAP operating margin of 29.3%. The non-GAAP net income was $250.2 million, resulting in earnings per diluted share of $0.46, which was $0.03 ahead of the midpoint of guidance, aided by the legal settlement.

Our Report Structure:

⦁ Company Overview
⦁ Investment Thesis
⦁ Key Drivers
⦁ Historical Quarterly Statement Analysis – Income Statement & Cash Flows
⦁ Historical Quarterly Balance Sheet Analysis
⦁ Historical Annual Financial Statement Analysis
⦁ Analysis Of Key Financial Ratios
⦁ Financial Forecasts For 3 Years
⦁ Forecasting The Capital Structure & Net Debt
⦁ Discounted Cash Flow Valuation
⦁ Trading Multiples
⦁ Key Risks
⦁ Disclosures

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